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Markets Live: US hopes lift local shares

Australian shares close higher after a big turnaround on Wall Street as American politicians said they were optimistic a budget agreement can be reached to avoid automatic spending cuts and tax increases.

4.14pm: The market has closed higher, buoyed by optimism that the US government will be able to deal with the coming fiscal cliff. The benchmark S&P/ASX200 added 30.4 points, or 0.7 per cent, to 4477.7, while the broader All Ords rose 27.5 points, or 0.6 per cent, to 4490.1.

4.03pm: And a final gem for today from our small business team: It takes a lot of guts to advertise your services on your competitor's website. But that's exactly what Mike Larsen did last week when he placed an ad for "Australia's worst employee" on jobs site seek.com.au.

3.51pm: Online employment group Seek says job ads in Australia and New Zealand are down so far in 2012-13.

Chief executive Andrew Bassat said there had been a ‘‘consistent but gradual decline in total ad volumes’’ since June 30.

Mr Bassat said the advertising volume decline meant Seek’s Australia and New Zealand operations - Seek’s largest generator of its earnings - were expected to report flat revenue in the first half of 2012-13 compared with the prior corresponding period.

3.43pm:Nathan Tinkler’s Patinack Farm thoroughbred stud has come up with the more than $240,000 it was required to pay in unpaid wages today and assured workers it hopes to keep their jobs, settle all debts in full, and will apply to terminate the liquidation begun last week.

3.37pm: Here's something from our Small Business team, in just three decades, Jindi Cheese has gone from farmhouse operation to being acquired by a multinational dairy group for the next phase of its expansion.

3.07pm: Rio Tinto may take a further writedown on its aluminium business at the end of this year, reflecting tough market conditions, chief financial officer Guy Elliott says.

"It's possible there will be some revisions this year, notably in aluminium," Elliott said at an investor seminar.

Rio Tinto bought the Alcan aluminium business for $US38 billion at the top of the market five years ago, taking on debt that nearly brought the company to its knees, and has been writing down the value of the business ever since.

2.50pm: As the local market trades at the day's highs, up 0.5 per cent, here's how other markets in the region are doing:

Japan (Nikkei): +0.6%

Hong Kong: +1%

Shanghai: +0.1%

Taiwan: +1.1%

Korea: +0.9%

India: +0.5%

Singapore: +0.5%

New Zealand: +0.1%

2.37pm: One for the cricket fans: Ricky Ponting is set to announce his retirement from Test cricket this afternoon.

Bendigo Bank is set to unveil the new name of its Bank of Cyprus unit in Melbourne later Thursday. A spokeswoman for Bendigo declined to comment.

1.40pm More on the dollar and positive sentiment around the US fiscal cliff.

In recent trade it was at $US1.0462, up from $US1.0448 yesterday afternoon.

CMC Markets foreign exchange dealer Tim Waterer said commentary from US president Barack Obama and House leader John Boehner had given markets a boost:

We had some positive commentary from the deal-makers in Washington, and that was warmly received by financial markets. That turnaround in risk sentiment suited the Australian dollar, and saw it edge back over the $US1.0450 level.

Mr Obama had hinted that a deal on the fiscal cliff could be brokered by Christmas.

Domestic capital expenditure data released on Thursday morning did little to move the Australian dollar, Mr Waterer said.‘‘There was quite a muted response to that,’’ he said.

‘‘I think traders are concentrating on the bigger global picture.’’

1.25pm: It’s TV shows may feature rather too prominently in the worst of 2012 lists, but Ten Network is doing very well today.

In what’s been a prettty good day for many media companies - Fairfax is up 2.69 per cent, News 1.7 6per cent - shares in the beleagured network have gone up a whopping 7.58 per cent to $0.355.

1.07pm: Three hours into the day and things are looking very positive - in fact shares are at their highest in three weeks. In recent trade the All Ordinaries index is 17.8 points higher, or 0.4 per cent, to 4480.4, while the benchmark S&P/ASX200 is 20.7 points higher, or 0.5 per cent, to 4468.0.

The rise is in large part thanks to the big banks, which have all risen by more than 0.4 per cent, and Rio Tinto, which has gone up 0.62 per cent to $57.05 after its upbeat outlook on China and cost-cuting pledges.

"There are plenty of reasons to be negative but over the past few weeks we have found even more reasons to be positive," said Peter Esho, an analyst at City Index.

"The often tired and fatigued sounding Rio Tinto of only a few months ago is today a lot more upbeat. Rio puts forward a good convincing argument for optimism," he said, adding that "the market could get an earnings surprise next year".

12.54pm: Now back to the BHP AGM... Earlier today Jac Nasser highlighted Graham Kerr's elevation to the position of chief financial officer as proof the company's succession planning is going well.

By the time the final question from shareholders was being asked, Mr Kerr got his first chance to shine, answering a question about accounting valuations of the company's shale gas assets.

Mr Nasser continued to be impressed, bookending Mr Kerr's comments with a compliment; "You passed the test".

12.45pm: The private capital investment trend series graph is a magnificent beast - surging ever higher, carrying Australia on the resources industry's back for the past two years, safely on track to deliver an unprecedented $173 billion or so worth of investment in Australia' productive future, Michael Pascoe writes:

But the Australian Bureau of Statistics' record of the capex spend in the September quarter isn't the most important part of today's release - it's the dip in expectations about how much will be invested by the end of this financial year.

The beauty of the capex survey is that it asks the nation's CFOs not just what they have spent, but what they think they will spend. The latest survey shows a 3.3 per cent dip from their intentions three months earlier, with most of that coming from an 8.1 per cent pull back in mining.

12.35pm: BHP AGM: Marius Kloppers has spoken expansively at the AGM about the controversial Browse gas project, which is designed to see a large LNG plant be built at the environmentally and culturally sensitive James Price Point near Broome in Western Australia.

BHP is one of several minority stakeholders in that project, beneath operator Woodside Petroleum, and there has been constant speculation that a floating LNG plant would be a better option than building the plant on land.

When asked about that debate, Kloppers reminded the audience that federal and state regulators had deemed that James Price Point be the "only" site investigated under the lease arrangements.

The CEO said he was not seeking to comment on the James Price Point site specifically, but went on to indicate that such a narrow focus was not ideal.

"As an industrial company, more options is always more valuable," he said. "That would be my general attitude."

Kloppers said that when the full investigations were completed, each joint venture partner would have the option to invest or walk away from the project. Royal Dutch Shell is also a joint venture partner in Browse.

12.19pm: A senior economist at NAB Capital, David de Garis, says the downgrades to spending plans could be enough to convince the Reserve to cut the cash rate at its board meeting next week:

From a policy point of view the outlook is always the key thing. ‘‘It’s keeping the door open to more easing in December.

Despite the stronger-than-expected result for the September quarter, the numbers suggest the pull-back in investment activity was ‘‘broad-based’’ across mining and other industries.

Markets are now betting there is a 72 per cent chance of a rate cut next week, up from a 60 per cent chance before the data was released.

12.16pm: The Australian share market opened the trading day relatively flat today as investors remained confused about US fiscal cliff negotiations, says CMC Markets trader Miguel Audencial:

Higher than expected Australian new home sales and private capital expenditure figures may give traders a reason to place buy orders.

German unemployment figures are due to be released tonight, while US quarterly GDP data, unemployment numbers, and pending home sales figures are expected on Friday night.

Although these are important for investors, these numbers are likely to take a back seat once again to any fiscal cliff related developments.

12.11pm: The dollar, on the other hand, is pretty flat, hardly reacting to the capital expenditure number, even falling back after the higher than predicted result.

The dollar was at $US1.0470 prior to the capex release, upon announcement jumped to $US1.0474, but quickly faded to $US1.0463.

“It’s off a little bit, but to be honest, the Aussie dollar is more in line with what’s going on in US equity markets,” says Thomas Averill, currency strategist at Rochford Capital. "People are just absorbed by negotiations around the US fiscal cliff, I think that’s going to be the biggest determinant of the Aussie’s direction in the short-term."

Looking forward to next week’s RBA board meeting, the market has not priced in a rate cut which could affect the dollar once the market is alert to the decision.

“If we do see an interest rate cut, I do expect the Aussie dollar to be sold off as a consequence of that,” Averill says.

12.02pm: Meanwhile, the sharemarket is trading at the day's highs, up 0.4 per cent. The materials sectors is up 0.3 per cent, financials have added 0.5 per cent and consumer staples gain 0.8 per cent. Telcos are down 0.4 per cent, led by a 2 cents drop in Telstra.

11.59am: The capex numbers are a bit a stronger than expected and that seems to have come mainly in plant and equipment, which is a good sign for the national accounts, says AMP Capital Investors chief economist Shane Oliver:

It looks like companies are revising down the rate of growth in capex in 2012/13 which is consistent with the concerns that we'll see a peak in mining investment next year, and the bulk of the downgrades came in the mining sector.

For the RBA it's probably neutral, yes it's stronger for the September quarter but against that the forward looking estimate look a bit softer, so you could say those two cancel each other out.

11.53am: Following the capex numbers, Arab Bank's David Scutt reckons the focus now shifts to the RBA, with the chances of a rate cut on the way up:

Question now is will the #RBA ease in Dec to help h'holds/businesses take up the slack? Odds are now 67% for a cut according to rate futures

Meanwhile, BHP's shares are up 0.2 per cent, after opening slightly lower.

11.40am: The housing sector posted a slight recovery in October, with new home sales lifting after three months of falls.

The Housing Industry Association (HIA) new home sales report showed 3.4 per cent increase for the month, after drops of 3.7 per cent and 5.3 per cent in September and August respectively.

Sales fell 5.6 per cent in July. The overall rise was fuelled by an increase of 31.4 per cent in multi-unit sales, while sales of detached houses fell 2.0 per cent in October - the fifth decline in six months.

11.38am: On a lighter note, BHP chairman Jac Nasser concedes that he is annoyed by the high number of acronyms used across BHP's massive operations. Ironic for a man speaking at the "BHP AGM"...

11.35am: And back to the BHP meeting, which seems a bit more exciting thant the capex figures (for now):

The first question from the floor is about the BMA coal alliance in Queensland, which was dogged by bad weather and industrial problems over the past 18 months.

The shareholder wants to know when BMA will perform to capacity. BHP chief executive Marius Kloppers responds by saying: "we are well on the way to returning that to what I would call normal operating conditions."

11.31am: The dollar hardly reacted to the numbers, trading at $US1.0473 or about the level it was trading at a couple of minutes ago.

11.30am: Capex figures are out: private capital expenditure rose 2.8 per cent in the third quarter, beating expectations of a 2 per cent rise.

11.27am: Back at the BHP AGM, chairman Jac Nasser has cited this year's elevation of Graham Kerr to the role of chief financial officer as an example of how the company's long term succession planning is working well.

Succession planning is one of the hot topics at today's annual meeting of BHP shareholders in Sydney, following recent reports that the company has accelerated the process of finding a replacement for chief executive Marius Kloppers.

Kloppers' speech did not contain any reference to the recent controversy, but Nasser spoke about the issue at length, reiterating BHP's commitment to continuous succession planning.

"Succession planning and executive development is a process and not an event, and at BHP Billiton this process is ongoing and thorough," he said.

11.22am: Focus is now turning to the third-quarter capex data out at 11.30am. Expectations are for a 2 per cent rise in private capital expenditure, down from a 3.4 per cent rise last quarter.

The dollar is trading at $US1.0470, still stuck below the level of $US1.05.

11.10am: More here from BHP. Edwin Mejia, a union leader from Colombia, said he had travelled all the way from the South American country to highlight the issues facing mining workers and people living near mines.

"Workers experience very bad conditions [in Colombia] compared to the workers in Australia," Mr Mejia said, citing the town of Albania as an example.

"Why? We are coming to ask to be treated the same as Australian workers."

Mr Mejia said union leaders have been facing death threats from paramilitaries in Colombia and he hoped to receive support from Australian unions and to increase the pressure on the Colombian government to act.

11.07am: The big banks are higher after the first hour of trade:

CBA is 0.23% higher to $59.11

ANZ is 0.63% higher to $23.97

NAB is 0.17% higher to $23.92

Westpac is 0.23% higher to $25.09

11.03am: IG Markets analyst Stan Shamu said the Australian market had opened in positive territory after Wall Street posted solid gains overnight spurred by encouraging remarks by President Barack Obama and House Speaker John Boehner on averting looming tax hikes and spending cuts that could push the economy into recession, the so-called ‘‘fiscal cliff’’.

‘‘It seems like they’re happy to work together to come up with some sort of deal before the end of the year,’’ Mr Shamu said.

‘‘Obama even went as far as to say he hoped to have something done by Christmas.

‘‘That really did encourage investors to bid the market higher. It’s a headline risk market at the moment as investors continue to react to remarks made by US politicians.’’

10.58am: BHP stocks are 0.2 per cent higher as the company fronts shareholder. Rio shares, after the company announced another cost-cutting drive, are 0.63 per cent higher, and Fortescue is 0.26 per cent higher.

10.55am: More from BHP. Outside the annual meeting, shareholders were mixed about Mr Kloppers' time as chief executive and whether BHP needed to announce a formal succession plan. Shareholder Lo Hak said a plan to replace Mr Kloppers had to be put in place.

"Just like any other big organisation, there should be a smooth transition from one [chief executive] to another," he said.

Another shareholder, who did not want to be named, said he was not concerned about the speculation surrounding Mr Kloppers.

"At the end of the day, they are not doing well," he said. "I've not been happy with BHP. The share price is down and the dividend is not great."

One thing worth noting here: stock picking, even more than golf, is an overwhelmingly male hobby. Put aside all the mathematics about how individual investors consistently underperform the market and pay enormous fees to various financial-service middlemen; all you really need to know is that if something is done only by men, it probably isn’t particularly sensible. Read more.

10.45am: The first morsels from inside the BHP AGM are beginning to arrive. BHP Billiton chairman Jac Nasser says he does not expect any significant increase in iron ore prices soon, following a year of heavy falls in Australia’s biggest export earner.

He also told shareholders at the company’s annual general meeting in Sydney that China’s growth rate would not continue at the same pace, but that was expected.

A more sustainable rate would follow in line with how other major economies have developed.

The company was also committed to a succession process for when chief executive Marius Kloppers departs, which it recently told the ASX it had started.

10.43am: And another:

10.41am: Here's a couple of pics from roving reporter Glenda Kwek from outside the BHP AGM:

10.35am: Media stocks are back in favour this morning, way out ahead of the general market:

Fairfax (publisher of this site): +2.15%

News: +1.36%

Ten: +4.55%

APN: +1.5%

10.32am: One of the components of the much-talked about fiscal cliff is a likely increase in the rate dividend payments are taxed at and to avoid that, many US companies have been paying out ‘‘special dividends’’.

Overnight, retailing monster Costco announced it would pay a special dividend totaling roughly $US3 billion ($A2.9 billion), the largest payout so far.

In some cases, insiders are among the biggest beneficiaries of the special dividend. That is not the case at Costco, which is relatively democratic in its share ownership, but other companies have seen big shareholders get huge payouts. More here.

10.28am: BHP's AGM has not only attracted investors. At least 50 protesters - from environmentalists to a Colombian union leader - have gathered outside today's meeting.

10.22am: Some of the better performed companies on the ASX200:

Ten: +4.55%

Intrepid: +3.33%

Fairfax: +3.23%

Aristocrat Leisure: +2.62%

Arrium: +2.21%

10.18am: Materials stocks are leading the market lower, but not heavily - they're down 0.17 per cent. Here's how other sectors on the ASX200 are performing:

Consumer disc: +0.5%

Info tech: +0.34%

Financials: +0.14%

Health: -0.14%

Telecoms: 0.11%

Energy: -0.07%

10.13am: Markets are flat, flat, flat. The benchmark S&P/ASX200 index is up 2.3 points, or 0.05 per cent, at 4,449.6, while the broader All Ordinaries index is up 1.7 points, or 0.04 per cent, at 4,464.3.

On the ASX 24, the December share price index futures contract was up eight points at 4,459, with 5,930 contracts traded.

10.07am: At the scene, BusinessDay's Glenda Kwek says ahead of the start of the BHP annual meeting and protesters outside the Sydney Convention Centre have been unveiling their banners. After unfolding the "BHP Dirty Deeds" one, someone yells, "Are you ready to rock?"

10.05am: Those listening into the AGM over the website are being treated to an instrumental muzak version of Tom Petty's 'Free Fallin' while they wait for the festivities to begin about 10.30am. Surely that's not a portent for the share price?

9.56am: Property group Stockland has appointed a fund manger with UBS, Mark Steinert, as its new chief executive. Mr Steinert will replace outgoing chief executive Matthew Quinn, who has been in the role for 12 years, on January 14.

Mr Quinn announced his intention to retire earlier in 2012.Mr Steinert has been with UBS sine 1994, where he began as the global head of real estate research and co-head of real estate in Australia and New Zealand.

9.51am: Some analyst rating changes for today:

Harvey Norman cut to hold at Deutsche Bank

Aristocrat Leisure raised to outperform at Credit Suisse

Senex Energy rated new hold at Deutsche Bank

JB Hi-Fi cut to neutral at JP Morgan

Rex Minerals cut to neutral at JP Morgan

Mastermyne cut to hold at from buy at Patersons

CSL raised to buy at BofA-Merrill Lynch

Aurora Oil raised to outperform at Credit Suisse

9.47am: Other AGMS we'll have today include SEEKI, Lend Lease, Village Roadshow and Macquarie Roadshow, where there could be some fireworks following the dramas Alan Jones has been at the centre of in recent times.

9.44am: The BHP AGM kicks off at around 10.30am and there's expected to be a lot of news from both inside and out. BusinessDay's Glenda Kwek will be there to take in the protestor action, while Peter Ker will be filing on the speculation surrounding Marius Kloppers' tenure as CEO and any other corporate news springing from the event.

9.41am: Rio Tinto has made headlines this morning by announcing it will cut deeper into its cost base with plans to slash $5 billion in costs by the end of 2014.

Resources reporter Peter Ker writes that the campaign comes after a year of steep cost cutting that saw hundreds of jobs lost in Australia, particularly the Sydney corporate office, and will see the company's exploration budget cut by $1 billion.

Rio said capital expenditure will also "taper off" next year, with most analysts expecting the spend in 2013 to be close to $US14 billion: several billion dollars below spending rates in 2012. The company said sustaining capital expenditure would fall by more than $US1 billion next year. Read the full story here.

9.38am: It looks like we’re in for a busy day and it’s going to have resources focus with BHP’s AGM and a Rio investor seminar. More on those in a moment.

9.36am: For a comprehensive look at this morning’s business news, check today’s need2know. Here are this morning’s key market links:

The SPI was 18 points higher at 4469

The $A was trading at $US1.0476

In the US, the S&P500 was 0.74% higher to 14009.29

In Europe, the FTSE100 added 0.06% to 5803.28

China iron ore was flat at $US117.90 a metric tonne

Gold lost 1.5% to $US1718.80 an ounce

WTI crude oil fell 88 US cents to $US86.30 a barrel

RJ/CRB commodities index lost 0.01% to 297.77

9.34am: Good morning folks. Welcome to the Markets Live blog for Thursday.

Contributors: Thomas Hunter, Jens Meyer, Richard Hughes

This blog is not intended as investment advice

BusinessDay with agencies

23 comments

Woo-hoo that's a good start!

4460 at COB tomorrow. I will check and update the master file and have evrything sorted by Monday.

All the best.

Commenter

4460

Location

Snidery Mark

Date and time

November 29, 2012, 9:30AM

OK here goes. 4465 CoB Tomorrow.

Commenter

Another Grump

Location

Melb

Date and time

November 29, 2012, 9:35AM

Will Gillard be rolled today? That would give the market a temporary lift.

Commenter

Allan

Location

Prahran

Date and time

November 29, 2012, 9:50AM

nah will take a few days at least for Shorten to get the guts to tell Gillard her position is untenable.

Commenter

Seriously...

Date and time

November 29, 2012, 10:05AM

I think the key sign to look for is Simon Crean and Wayne Swan attacking Kevin Rudd's character. As it brought on a spill last time it might be a good indicator of one coming up again.

We could have a poll on which date Gillard will resign or on who the next PM will be (my guess is Shorten will be PM after reluctantly putting his hand up at the last minute) however that sort of thing probably belongs in the politics live blog.

Commenter

Seriously...

Date and time

November 29, 2012, 10:12AM

I hope so.....................

Commenter

Linux

Date and time

November 29, 2012, 10:20AM

Being rolled, metaphorically speaking, started all the trouble didnt it ?.

Commenter

Another Grump

Location

Melb

Date and time

November 29, 2012, 10:36AM

C'mon, Seriously..., don't take away my dreams. We still need to dream.

Commenter

Snidery Mark

Date and time

November 29, 2012, 10:47AM

Follow the leader is lifting us today either way (and it's gone past 11am !!!!!! ).